Britain, France pressure Airbus on A400M

DUBAI (Reuters) - British and French air chiefs renewed pressure on Airbus over delays to its A400M military transporter on Saturday but suggested pooling maintenance or even sharing the use of some planes to balance cost increases.

Leaders of the two largest western European air forces told Reuters they needed Airbus to supply the full quantity of planes on order without an increase in the budget, but acknowledged compromises may have to be made to keep the project alive.

A French official said the contract could be handled in tranches with urgent needs tackled as a priority, including co-operation between states where necessary, and some deliveries pushed back until a later date.

Due to make its maiden flight next month, the A400M airlifter has been delayed 3-4 years by engine snags and other industrial problems, some of which Airbus blames on political interference in the 20 billion euro defence project. Airbus parent EADS EAD.PA is in talks with seven European buyers including France and Britain over how to handle billion of euros of extra costs that crept into Europe’s largest defence project due to the delays, as well as the timing of deliveries. Britain initially threatened to cancel all or part of its order due to the delays, but is now calling on Airbus to deliver all 25 planes without any increase in overall cost.

“We have got to stand firm and challenge industry,” Air Chief Marshall Sir Stephen Dalton, head of Britain’s Royal Air Force, told Reuters at a Dubai conference organised by the Institute for Near East and Gulf Military Analysis.

“They have got to come back in the middle of next month and tell us what can be done.”

Analysts say buyers are torn between accepting a price hike which could stabilise the troubled programme, but would mean fewer planes available for the same amount of money, or sticking to their guns and risking seeing the project collapse.

France is leading efforts to avoid that since it would endanger fragile efforts at building European arms co-operation.

EADS is for its part anxious to avoid delay penalties.

BUYING IN TRANCHES

Dalton signalled Britain, facing urgent operational needs in Afghanistan, would hold out for all of its aircraft.

“We are saying 25 is the answer, what is the question?,” he told Reuters, adding the onus was on Airbus Military to say what could be achieved.

He said there was some recognition that the costs had risen but planners were trying to offset this by reshuffling upfront costs and finding more efficient ways to carry out aircraft maintenance by sharing it between nations.

The contract includes the planes and 5 years of support.

France’s air force chief also pinpointed repairs and maintenance as a source of savings and predicted the order would effectively be broken into tranches with later deliveries spread over a longer period to help defray short-term cost pressures.

In the short run, that could also mean sharing the use of the planes in military operations, he said.

“We are looking closely at sharing scarce support resources within the group of A400M countries,” General Jean-Paul Palomeros, Chief of staff of the French air force, told Reuters.

He said France needed 50 planes as originally envisaged but “all options” were open depending on the rhythm of deliveries.

“We will simply have to agree to buy some of the planes in tranches and spread them out over time, while maximizing the use of the early part of the fleet with our allies. Then gradually we will buy further planes with delivery over a longer period.”